6 ms·

> Isn't it because majority of Germans rent and majority of Poles buy? No. Economically, it doesn't make a difference. Although renting is better to society as

> Isn't it because majority of Germans rent and majority of Poles buy? No. Economically, it doesn't make a difference. Although renting is better to society as a whole.

baq 9y ago
I never understood that. I keep hearing about landlords ultimately sucking all the earnings of the society that lives on the land they own (see the Bay Area for an example, where a mattress in a wardrobe costs you $1k or whatever).
- epistasis 9y ago
  Charging rent doesn't necessarily have to be rent-seeking. The Bay Area suffers from a severe and self inflicted housing shortage, meaning that landlords and property owners are actively rent seeking by not letting housing change to match demand.
- Analemma_ 9y ago
  It's complicated, there are pros and cons of each. The fewer landlords you have the better, but at the same time, situations like the United States-- where half the country has gigantic mortgages and relies critically on their home being an always-appreciating asset-- isn't great either. Economists have argued about this forever and there's no clear right answer.
- ucaetano 9y ago
  > I never understood that. I keep hearing about landlords ultimately sucking all the earnings of the society that lives on the land they own When you buy a house, you're essentially becoming your own landlord. Taxes aside, it doesn't make a difference if you rent, buy a house and live in it, or buy a house, rent it out, and rent another house for yourself. The issue isn't being a landlord, but blocking the building of new housing when demand is going up so you can extract economic rents from society.
bobthechef 9y ago
> renting is better to society as a whole. Care to explain? I would say that widespread renting is actually quite terrible. It means that property is kept in the hands of class of landowners (and when wealth is concentrated, this also tends to concentrate power); that instead of investing one's income, renters are basically paying off the owner's mortgage; that generally, people prefer to own, and so widespread renting is a sign of being unable to participate in the real estate market; that it generally is associated with a rentier economy. So, no, I do not think renting is better. At all.
- ucaetano 9y ago
  > Care to explain? Sure! Caveat: please ignore taxes, emotional value and a few other country-specific details. When you're buying a home, you're doing 3 independent things: 1) Borrowing money (optional) 2) Making a capital investment into an illiquid, immovable asset 3) Renting an asset that you own to yourself for you own usage Give how much little money you have (compared to a company) and how your earnings and spending might oscillate, having so much of your assets locked up in an illiquid, immovable, single piece is a bad idea. It prevents you from moving around and taking a new job, for example. Also, given your individual risk, you have to pay interest rates much higher than what you'd expect from an institutional investor. Also, you don't have any economies of scale for renting out, selling, doing maintenance, etc. Now if an institutional investor bought a large stock of housing and rented it out, it is: 1) Borrowing money at lower rates than you 2) Making capital investment in thousands of individual, immovable assets 3) Renting an asset to you With a much larger scale, the institutional investor has massive gains in economies of scale on selling, buying, renting, fixing, etc. Also, it is able to spread the risk of a single house or resident across its entire base, essentially transforming the individual risk into a financial cost to the renters, reducing the exposure to extreme events. Finally, renting increases an individual's mobility, allowing for better allocation of jobs to different places in a country, improving economic growth and enabling the economy to adapt faster to changing situations. PS: NIMBYism fucks this up. This only works if new housing is allowed to be built freely based on supply and demand, which is not the case in the most "progressive" parts of the US (Bay Area, for example).
  - 9y ago
deleted 9y ago
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> Isn't it because majority of Germans rent and majority of Poles buy? No. Economically, it doesn't make a difference. Although renting is better to society as a whole.

baq 9y ago

I never understood that. I keep hearing about landlords ultimately sucking all the earnings of the society that lives on the land they own (see the Bay Area for an example, where a mattress in a wardrobe costs you $1k or whatever).

epistasis 9y ago
Charging rent doesn't necessarily have to be rent-seeking. The Bay Area suffers from a severe and self inflicted housing shortage, meaning that landlords and property owners are actively rent seeking by not letting housing change to match demand.
Analemma_ 9y ago
It's complicated, there are pros and cons of each. The fewer landlords you have the better, but at the same time, situations like the United States-- where half the country has gigantic mortgages and relies critically on their home being an always-appreciating asset-- isn't great either. Economists have argued about this forever and there's no clear right answer.
ucaetano 9y ago
> I never understood that. I keep hearing about landlords ultimately sucking all the earnings of the society that lives on the land they own When you buy a house, you're essentially becoming your own landlord. Taxes aside, it doesn't make a difference if you rent, buy a house and live in it, or buy a house, rent it out, and rent another house for yourself. The issue isn't being a landlord, but blocking the building of new housing when demand is going up so you can extract economic rents from society.

bobthechef 9y ago

> renting is better to society as a whole. Care to explain? I would say that widespread renting is actually quite terrible. It means that property is kept in the hands of class of landowners (and when wealth is concentrated, this also tends to concentrate power); that instead of investing one's income, renters are basically paying off the owner's mortgage; that generally, people prefer to own, and so widespread renting is a sign of being unable to participate in the real estate market; that it generally is associated with a rentier economy. So, no, I do not think renting is better. At all.

ucaetano 9y ago
> Care to explain? Sure! Caveat: please ignore taxes, emotional value and a few other country-specific details. When you're buying a home, you're doing 3 independent things: 1) Borrowing money (optional) 2) Making a capital investment into an illiquid, immovable asset 3) Renting an asset that you own to yourself for you own usage Give how much little money you have (compared to a company) and how your earnings and spending might oscillate, having so much of your assets locked up in an illiquid, immovable, single piece is a bad idea. It prevents you from moving around and taking a new job, for example. Also, given your individual risk, you have to pay interest rates much higher than what you'd expect from an institutional investor. Also, you don't have any economies of scale for renting out, selling, doing maintenance, etc. Now if an institutional investor bought a large stock of housing and rented it out, it is: 1) Borrowing money at lower rates than you 2) Making capital investment in thousands of individual, immovable assets 3) Renting an asset to you With a much larger scale, the institutional investor has massive gains in economies of scale on selling, buying, renting, fixing, etc. Also, it is able to spread the risk of a single house or resident across its entire base, essentially transforming the individual risk into a financial cost to the renters, reducing the exposure to extreme events. Finally, renting increases an individual's mobility, allowing for better allocation of jobs to different places in a country, improving economic growth and enabling the economy to adapt faster to changing situations. PS: NIMBYism fucks this up. This only works if new housing is allowed to be built freely based on supply and demand, which is not the case in the most "progressive" parts of the US (Bay Area, for example).
- 9y ago

deleted 9y ago

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